With rates higher, ARMs are back

NEW YORK – Aug. 14, 2013 – Karen Zoeller wasn’t too worried about rising mortgage interest rates when she went house hunting. But the 25 percent downpayment requirement for an investment property took her aback.

So she pulled an old trick out of her bag: an adjustable rate mortgage. An ARM required just 20 percent down, with a 4.25 percent interest rate, about three-quarters of a point less than fixed mortgages being offered to investment buyers, she said.

“I don’t intend to hold the property for longer than five years,” said Zoeller, an intensive-care nurse from Arlington, Mass., who closed on the house Tuesday. “I can use the extra 5 percent to put windows in.”

ARMs aren’t quite back with a vengeance; they’re more creeping in from the shadows.

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